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The Senate Finance Committee began to wade through its tax reform plan Nov. 13, setting
off a marathon markup process that will likely consume the remaining legislative days
before Thanksgiving recess.

Senators have already submitted several hundred amendments, including two from Finance
Committee Chairman Orrin G. Hatch (R-Utah) to make the
plan compliant with chamber rules and to remove the two layers of corporate tax. Hatch
hinted in his opening remarks that changes to the corporate provisions are afoot,
and said he hopes to make them permanent despite concerns about how they would impact
the deficit beyond the 10-year budget window allowed by Senate rules.

Hatch said he plans to release an updated chairman’s mark on Nov. 14. When asked about
the document, he said “we will have to see. This is a wide open mark.”

Democrats at the markup slammed Republicans for supporting a plan that would add to
the deficit and would disproportionately help corporations and the wealthy.

The markup comes the same week the House is set to vote on its bill (
H.R. 1)—possibly as early as Nov. 16. House Ways and Means Committee Chairman Kevin Brady
(R-Texas) told reporters Nov. 13 he doesn’t anticipate any big changes to the legislation
this week.

Brady also said he has told senators that keeping the $10,000 cap for property tax
deductions is a top priority. The Senate plan would fully repeal state and local tax
deductions. (For a road map of where to find key provisions and compare the House
tax reform bill (H.R. 1) with the Senate Finance Committee version, read Bloomberg
Tax’s
analysis.)

The Congressional Budget Office said, however, that Congress’ main scorekeeper for
tax legislation won’t be able to gauge the economic effects of the House tax-overhaul
bill quickly, which means the House may vote on H.R. 1 before knowing those effects.

The Joint Committee on Taxation indicated to the CBO that it’s not practical to do
a full “macroeconomic analysis” in “the very short time available between completion
of the bill and the filing of the committee report.”

Red Lines?

During the markup, Sen. Pat Roberts (R-Kan.) said that while the plan isn’t “perfect,”
it is “good” and can be improved.

Sen. Ron Johnson (R-Wis.) told Bloomberg Tax that he doesn’t like the tax treatment
of passthrough businesses in the Senate tax plan. The Senate version suggests a 17.4
percent deduction for the non-wage portion of passthrough business income.

“Let’s honor what the people who developed the framework acknowledged when they said
a 20 percent rate for corporates, and a 25 percent rate for passthroughs,” he said.

Johnson said he wasn’t drawing any “red lines” right now. “But I’m doing everything
I can to make sure the framework is followed,” he said.

Awash in Amendments

Submitting an amendment doesn’t guarantee the senator will end up offering it. Republicans
are likely going to try to control the markup process, allowing certain proposals
to be brought forward. Democrats may also decide not to push certain amendments that
are more about messaging than a certain policy.

Hatch submitted an amendment offering a 12.5 percent deduction on the dividends that
corporations pay for five years. Hatch’s office has been exploring the idea, known
as corporate integration, since 2016. Previous iterations discussed a 40 percent and
a 25 percent deduction on dividends paid.

An amendment from John Thune (R-S.D.), the third-ranking Republican in the Senate,
would include his CHARITY Act (S. 1343) in the tax plan, Thune’s bill is widely seen
as a marker for where Republicans stand on nonprofit issues.

Sen. Ron Wyden (D-Ore.), the Finance Committee’s ranking member, filed three amendments
requiring the state and local tax deduction to be fully reinstated in certain situations,
such as if states cut school funding or eliminate first-responder jobs.

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